Donald Trump’s victory in the 2024 election – and his threat to impose tariffs on all imports to the United States – highlights a significant problem for the global economy.
The United States is a technological powerhouse, spending more than any other country on research and development and win more Nobel Prizes over the last five years than all other countries combined. His inventions and economic successes are the envy of the globe. But the rest of the world must do everything in its power to avoid becoming too dependent on it.
And this situation wouldn’t have been much different if Harris had won.
Donald Trump’s “America First” approach is actually a bipartisan policy. At least since the policies of former President Barack Obama energy independencethe United States essentially seeks to maintain its technological supremacy while putting an end to the offshoring of industrial jobs.
One of the major choices Trump made during his first term was to accept higher prices for American consumers in order to protect domestic producers by imposing high tariffs on almost all trading partners.
For example, Trump’s 2018 tariffs on washing machines around the world mean American consumers pay 12% more for these products.
President Joe Biden – certainly in a more polite way – then increase some of Trump’s tariffs: up to 100% on electric vehicles, 50% on solar cells and 25% on batteries from China.
At a time of climate emergency, this was a clear choice to slow the energy transition to protect America’s manufacturing industry.
While Biden signed a truce with Europe on customs tariffs, it has started a perhaps even more damaging battle by launching a race for subsidies.
The US Inflation Reduction Act, for example, contains 369 billion US dollars (£286 billion) in subsidies in areas such as electric vehicles or renewable energy. And the Chips Law committed $52 billion to subsidize the production of semiconductors and computer chips.
China, Europe and the rest of the world
This American industrial policy may be inward-looking, but it has obvious consequences for the rest of the world. China, after decades of growth mainly based on exports, must now face enormous problems of industrial overcapacity.
The country is now working to encourage more domestic consumption and diversify its business partners.
Europe, despite very tight budget constraints, spends a lot of money in the race for subsidies. Germany, a country facing sluggish growth and major doubts about its industrial modelundertakes to match American subsidies, for example by offering 900 million euros (£750 million) to Swedish battery manufacturer Northvolt to continue production in the country.
All these subsidies are harm the global economy and could have easily financed urgent needs such as the electrification of the entire African continent with solar panels and batteries. Meanwhile, China has replaced the United States and Europe as the largest investor in Africa, following its own interest in natural resources.
Trump’s new term could be an opportunity to correct ideas.
One could, for example, argue that the full-scale invasion of Ukraine, and the thousands of deaths and resulting energy crisis, could have been avoided if the Biden administration had been clearer with the president Russian Vladimir Putin on the consequences of an invasion. and supplied modern weapons to kyiv before the war.
But the fault lies mainly with Europe. Credit where credit is due, the strategic problem of becoming too dependent on Russian gas is something Trump had Germany clearly warned spoken during his first term.
The path forward is clear: Europe could help China resolve its overcapacity problems by negotiating an end to its own tariff war against Chinese technologies such as solar panels And electric cars.
In exchange, Europe would regain a certain sovereignty by producing more of its own clean energy instead of import record amounts of liquid gas from the United States. This could also learn a few things to produce with Chinese companies, and China could use its immense influence on Russia end the invasion of Ukraine.
The European Union could also redouble its efforts on what it does best: signing trade agreementsand use them as a means of reduce carbon emissions across the world.
It’s not just about Europe and China. After decades of continuous improvement In every major dimension of human life, the world is moving backwards.
The number of people facing hunger is increasing, which brings us back to 2008-9 levels. War rages in Gaza, Sudan, Myanmar, Syria and now Lebanon. The world had not seen so many civilian casualties since 2010.
For better or worse, a Trump administration is unlikely to reverse the path of less U.S. interventionism. She is also unlikely to lead any major initiatives on peace, climate change or trade liberalization.
The world is alone and America will not come save him.
We don’t know what will happen to the United States. Perhaps Trump’s return will essentially be a continuation of what has happened over the past ten years. Maybe prohibitive prices or destroy the institutions that made the United States such economic power it will make the US economy less relevant. But it’s something that Americans chose, and that the rest of the world simply has to live with.
In the meantime, the only thing the world can do is learn to work better together, without becoming too dependent on each other.
(Author: Renaud Foucartlecturer in economics, Lancaster University Management School, Lancaster University)
(Disclosure Statement: Renaud Foucart does not work for, consult, own shares in, or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond his academic appointment)
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